1H12 Consolidated Results
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  • 1. 1H12 CONSOLIDATED RESULTS JULY 24th 20121H12 Consolidated ResultsFlavio Cattaneo Chief Executive OfficerGiuseppe Saponaro Chief Financial OfficerJULY 24th, 2012 Investor Relations 1
  • 2. 1H12 CONSOLIDATED RESULTS JULY 24th 2012Agenda Highlights 3 1H12 Results 6 Annexes 13 Investor Relations 2
  • 3. 1H12 CONSOLIDATED RESULTS JULY 24th 2012HighlightsStrategic Overview2012 on Track Sound results Good underlying financial and operating performance 1H Capex in line with record breaking levelsGood Strategic Strong focus on pending regulatory issuesProgress - So far, issued the regulation for pilot projects on batteries EMTN programme updated (up to 5€bn)Risk Adverse Hedged on volatility factorsAttitude - Energy Demand - Inflation - Sovereign Investor Relations 3
  • 4. 1H12 CONSOLIDATED RESULTS JULY 24th 2012HighlightsRisk Adverse Attitude VOLATILITY ON Energy Demand Price Dynamics Sovereign -2.1% yoy* Inflation 10 yrs Bond Yield at 162GWh TERNA HEDGING FACTORS HEDGING FACTORS TERNA’SMitigation on Volumes Regulatory Period end 2013Till 2012 From 2013 Full recognition Risk Freeconfirmation of binomial tariff Interim Reviewpreviousmechanism* 1H12 vs. 1H11, based on 2011 final figures and 2012 provisional figures Investor Relations 4
  • 5. 1H12 CONSOLIDATED RESULTS JULY 24th 2012Highlights2012 on Track P&L RESULTS BALANCE SHEET CAPEXTotal Revenues Net Debt Total Group Capex+7.9% yoy 5,887 €mn 551 €mnat 857€mn +764€mn vs. FY11 +8€mn vs. 1H11EBITDA Refinancing+10.3% yoy No Needsat 669€mn till 2015Net Income Cont.Op.222 €mn+ 13.2%*yoy* applying Robin Hood Tax in 1H11, -4.9% as reported Investor Relations 5
  • 6. 1H12 CONSOLIDATED RESULTS JULY 24th 20121H12 ResultsConsolidated RevenuesTotal Revenues Grid Fee Other Activities+7.9% yoy +8.5% yoy -2mn yoyat 857€mn at 746€mn at 29€mnRevenues Breakdown1 Revenues Evolution1 +63 857 0 -1 2 6 794 22 7 58 857 22 2 8 81 75 794 64 746 688 Other Activities 1H11 Grid Fee Other Non Other 1H12 1H11 1H12 Energy Regulated Revenues Grid Fee Other Energy Items Items Revenues Non Regulated Revenues Other Revenues In € mn 1. In resolution n°11/07 the Regulator redefined the perimeter of Terna’s activities for the Fourth Regulatory Period, moving the Energy Operation Activities from Transmission to Dispatching Investor Relations 6 2. 2011 figures restated according to IFRS5
  • 7. 1H12 CONSOLIDATED RESULTS JULY 24th 20121H12 ResultsConsolidated Costs & EBITDATotal Operating Costs EBITDA EBITDA % Stable yoy +10.3% yoy 78.1% at 188€mn at 669€mn + 1.7pp yoyCosts Breakdown Costs Evolution 188 188 -1 0 1 20 21 64 64 Salaries Services 188 188 Other 104 103 1H11 1H12 1H11 Salaries Services Other 1H12 In € mn Investor Relations 7
  • 8. 1H12 CONSOLIDATED RESULTS JULY 24th 20121H12 ResultsFrom EBIT to Net IncomeEBIT € mn 1H11 1H12 ∆ ∆%+12.2% yoy D&A 193 205 12 6.1%at 464€mn EBIT 414 464 51 12.2%Profit Before Taxes+13.1% yoy Net Financial Expenses PBT 58 356 62 402 4 47 6.9% 13.1%at 402€mnTax Rate Impacted by Tax Rate 34.4% 1 44.8% +10.4 ppRobin Hood Tax 1 Taxes 122 180 58 47.4%Net Income Cont. Op. Net Income Continuing Operations 233 222 -11 -4.9% 2 Net Income Adj. Continuing Operations 196 222 26 13.2%+13.2% yoy 2 Net Income Discontinued Operations 95 3 0 -95at 222€mn Group Net Income 328 222 -106 -32.4% 1. Including 0.9 €mn restated for redemption of goodwill 2. Vs 1H11 Net Income adjusted applying Robin Hood Tax Investor Relations 8 3. 2011 figures restated according to IFRS5
  • 9. 1H12 CONSOLIDATED RESULTS JULY 24th 20121H12 ResultsCapex BreakdownTotal Group Capex Incentivized Capex +2% 81% of Reg. Capex at 551€mn at 426€mnTotal Regulated Capex Capex Breakdown €mn €mn 1H11 1H12 ∆ ∆ % yoy 19% yoy I3 246 211 -36 -15% I2 160 215 55 34% 40% 523 I1 85 98 12 14% €mn Total Regulated Capex 492 523 31 6% Other* 51 28 -23 41% Total Group Capex 543 551 8 2% 81% I1 I2 I3 Incentivized * Not included in RAB + Capitalized Financial Charges + Non Traditional Capex Investor Relations 9
  • 10. 1H12 CONSOLIDATED RESULTS JULY 24th 20121H12 ResultsNet Debt Evolution & Financial StructureNet Debt Fix/Floating Ratio Avg. Maturity 5,887€mn 48/52% 8 yearsNet Debt Evolution €mn Financial Indebtedness Terna SpA Bonds EIB Loans +764 Banks (LT) 15% 261 5,887 17% 562 67% 5,123 390 330 Rating M/L Term Outlook Terna* Sovereign Terna* Sovereign S&P A- BBB+ Negative Negative Operating June 30, Dec.31, ∆ WC Capex Dividends Moodys Baa1 Baa2 Negative Negative Cash 2012 2011 & Flow Other* Fitch A A- Negative Negative * Including Other Fixed Assets Changes, Change in Capital & Other * Government Related Entity Investor Relations 10
  • 11. 1H12 CONSOLIDATED RESULTS JULY 24th 20121H12 ResultsClosing RemarksFY12 Solid 1H12 results supporting FY estimatesOutlook Regulated capex expected in line with 2011What’s Next… Sustain focus on: - Securing appropriate regulatory outcomes - Developing Non Traditional Activities Investor Relations 11
  • 12. 1H12 CONSOLIDATED RESULTS JULY 24th 2012THANK YOU.QUESTIONS?Flavio Cattaneo Chief Executive OfficerGiuseppe Saponaro Chief Financial Officer1H12 Consolidated ResultsJULY 24th, 2012 Investor Relations 12
  • 13. 1H12 CONSOLIDATED RESULTS JULY 24th 2012ANNEXES Investor Relations 13
  • 14. 1H12 CONSOLIDATED RESULTS JULY 24th 2012AnnexesElectricity Market Trends1H12 Energy Demand 1H11 1H12 ∆ % -2.1% yoy Demand TWh 165.5 162.0 -2.1% -0.6% 12 months rolling TWh 32 Range last 5 years 31 12 Months Rolling Yr -1 30 29 28 27 26 25 24 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May JunYoY Chg% Jul -4.0% Aug 6.9% Sep 7.5% Oct 0.1% Nov 0.2% Dec -3.8% Jan -1.7% Feb 4.0% Mar -4.1% Apr -4.1% May -4.7% Jun -1.9%2011 final figures, 2012 provisional figures Investor Relations 14
  • 15. 1H12 CONSOLIDATED RESULTS JULY 24th 2012AnnexesConsolidated Income Statement € mn 1H11 1H12 ∆mn ∆% 1 Operating Revenues 794 857 63 7.9% of which Grid Fee 688 746 58 8.5% Other Energy Items 75 81 6 8.0% 1 Other Activities 2 31 29 -2 -5.5% Operating Expenses 188 188 0 0.1% of which Salaries 104 103 -1 -0.6% Services 64 64 0 -0.5% Other 20 21 1 5.0% EBITDA 606 669 62 10.3% D&A 193 205 12 6.1% EBIT 414 464 51 12.2% Financial Income & Equity Inv. 19 36 17 88.9% Financial Charges 77 98 21 27.1% Pre Tax Profit 356 402 47 13.1% 3 Taxes 122 180 58 47.4% 3 Tax Rate (%) 34.4% 44.8% Net Income Continuing Operations 233 222 -11 -4.9% 1 Net Income Discontinued Operations 95 0 Total Net Income 328 222 -106 -32.4% 1. 2011 figures restated according to IFRS5 2. Other Revenues + Non Regulated Revenues Investor Relations 15 3. Including 0.9 €mn restated for redemption of goodwil
  • 16. 1H12 CONSOLIDATED RESULTS JULY 24th 2012AnnexesIFRIC 12 1 € mn 1H11 1H12 ∆ 1 Operating Revenues 794 857 63 of which Grid Fee 688 746 58 Other Energy Items 61 67 7 1 Other Activities 2 31 29 -2 IFRIC 12 15 14 -1 Operating Expenses 188 188 0 of which Salaries 101 102 1 Services 57 54 -3 Other 15 18 3 IFRIC 12 15 14 -1 1. 2011 figures restated according to IFRS5 2. Other Revenues + Non Regulated Revenues Investor Relations 16
  • 17. 1H12 CONSOLIDATED RESULTS JULY 24th 2012AnnexesQuarterly Analysis € mn 1Q11 1Q12 ∆ 2Q11 2Q12 ∆ Operating Revenues 385 432 47 409 1 425 16 of which Grid Fee 352 384 33 337 362 25 Other Energy Items 13 27 14 47 40 -7 Other Activities 2 14 15 1 17 1 15 -2 IFRIC 12 6 5 -1 9 9 0 Operating Expenses 90 92 2 98 96 -2 EBITDA 295 340 45 312 329 17 D&A 95 101 6 98 103 6 EBIT 200 239 39 214 226 12 Financial Income & Equity Inv. 11 16 6 8 20 11 Financial Charges 36 47 12 41 51 9 Pre Tax Profit 174 208 33 181 195 13 3 Taxes 60 93 33 62 87 25 Net Income Continuing Operations 114 114 0 119 108 -12 Net Income Discontinued Operations 59 0 -59 36 0 -36 Group Net Income 173 114 -59 155 108 -47 1. 2011 figures restated according to IFRS5 2 . Other Revenues + Non Regulated Revenues 3. Including restatement for redemption of goodwil Investor Relations 17
  • 18. 1H12 CONSOLIDATED RESULTS JULY 24th 2012AnnexesConsolidated Balance Sheet * € mn FY11 1H12 ∆mn Assets PP&E 8,618 8,965 347 Intangible Asset, net 471 464 -7 Financial Inv. And Other 74 77 3 Total Fixed Assets 9,163 9,506 343 Net WC -724 -394 330 Funds -565 -530 35 Total Net Invested Capital 7,874 8,582 708 Financed by Consolidated Net Debt 5,123 5,887 764 Total Shareholders Equity 2,751 2,695 -56 D/E Ratio Continuing Operations 1.9 2.2 Number of Shares (000) 2,010 2,010 Investor Relations 18
  • 19. 1H12 CONSOLIDATED RESULTS JULY 24th 2012AnnexesConsolidated Cash Flows € mn 1H11 1H12 Net Income 233 222 Depreciation * 192 203 Net Change in Funds -10 -35 Operating Cash Flow 415 390 Change in Working Capital -43 -330 Cash Flow from Operating Activities 373 59 Capital Expenditures -543 -551 Other Fixed Asset Changes -29 6 Free Cash Flow -200 -486 Dividends -261 -261 Change in Capital and Other 2 -16 PV Disposal 209 0 Change in Net Cash (Debt) -250 -764 * Net of assets’ disposal Investor Relations 19
  • 20. 1H12 CONSOLIDATED RESULTS JULY 24th 2012AnnexesFocus on Sorgente-Rizziconi*Technical Information • Capex expected: over 700mn€ • 2x3 submarine cables (380kV): 38 km below the Strait of Messina • 5Km underground cables and 60Km overhead lines, 4 power substationsWork in Progress - Update • Total Capex spent in 1H: 120mn€ • Main Activities: - 3 Cables already laid below the Strait - Excavation activity started - Power substations and overhead lines building on-going * Investor Relations 20
  • 21. 1H12 CONSOLIDATED RESULTS JULY 24th 2012Disclaimer THIS DOCUMENT HAS BEEN PREPARED BY TERNA S.P.A. (THE “COMPANY”) FOR THE SOLE PURPOSE DESCRIBED HEREIN. IN NO CASE MAY IT BE INTERPRETED AS AN OFFER OR INVITATION TO SELL OR PURCHASE ANY SECURITY ISSUED BY THE COMPANY OR ITS SUBSIDIARIES. THE CONTENT OF THIS DOCUMENT HAS A MERELY INFORMATIVE AND PROVISIONAL NATURE AND THE STATEMENTS CONTAINED HEREIN HAVE NOT BEEN INDEPENDENTLY VERIFIED. NEITHER THE COMPANY NOR ANY OF ITS REPRESENTATIVES SHALL ACCEPT ANY LIABILITY WHATSOEVER (WHETHER IN NEGLIGENCE OR OTHERWISE) ARISING IN ANY WAY FROM THE USE OF THIS DOCUMENT OR ITS CONTENTS OR OTHERWISE ARISING IN CONNECTION WITH THIS DOCUMENT OR ANY MATERIAL DISCUSSED DURING THE PRESENTATION. THIS DOCUMENT MAY NOT BE REPRODUCED OR REDISTRIBUTED, IN WHOLE OR IN PART, TO ANY OTHER PERSON. THE INFORMATION CONTAINED HEREIN AND OTHER MATERIAL DISCUSSED AT THE CONFERENCE CALL MAY INCLUDE FORWARD- LOOKING STATEMENTS THAT ARE NOT HISTORICAL FACTS, INCLUDING STATEMENTS ABOUT THE COMPANY’S BELIEFS AND EXPECTATIONS. THESE STATEMENTS ARE BASED ON CURRENT PLANS, ESTIMATES, PROJECTIONS AND PROJECTS, AND CANNOT BE INTERPRETED AS A PROMISE OR GUARANTEE OF WHATSOEVER NATURE. HOWEVER, FORWARD-LOOKING STATEMENTS INVOLVE INHERENT RISKS AND UNCERTAINTIES AND ARE CURRENT ONLY AT THE DATE THEY ARE MADE. WE CAUTION YOU THAT A NUMBER OF FACTORS COULD CAUSE THE COMPANY’S ACTUAL RESULTS AND PROVISIONS TO DIFFER MATERIALLY FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENT. SUCH FACTORS INCLUDE, BUT ARE NOT LIMITED TO: TRENDS IN COMPANY’S BUSINESS, ITS ABILITY TO IMPLEMENT COST-CUTTING PLANS, CHANGES IN THE REGULATORY ENVIRONMENT, DIFFERENT INTERPRETATION OF THE LAW AND REGULATION, ITS ABILITY TO SUCCESSFULLY DIVERSIFY AND THE EXPECTED LEVEL OF FUTURE CAPITAL EXPENDITURES. THEREFORE, YOU SHOULD NOT PLACE UNDUE RELIANCE ON SUCH FORWARD-LOOKING STATEMENTS. TERNA DOES NOT UNDERTAKE ANY OBLIGATION TO UPDATE FORWARD-LOOKING STATEMENTS TO REFLECT ANY CHANGES IN TERNA’S EXPECTATIONS WITH REGARD THERETO OR ANY CHANGES IN EVENTS. EXECUTIVE IN CHARGE OF THE PREPARATION OF ACCOUNTING DOCUMENTS “LUCIANO DI BACCO” DECLARES, PURSUANT TO PARAGRAPH 2 OF ARTICLE 154-BIS OF THE CONSOLIDATED LAW ON FINANCE, THAT THE ACCOUNTING INFORMATION CONTAINED IN THIS PRESENTATION, FOR WHAT CONCERNS THE ACTUAL FIGURES, CORRESPONDS TO THE DOCUMENT RESULTS, BOOKS AND ACCOUNTING RECORDS. Investor Relations 21
  • 22. 1H12 CONSOLIDATED RESULTS JULY 24th 2012 Investor Relations 22